See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Delta Air Lines, Inc. (DAL) - free report >>
United Airlines Holdings Inc (UAL) - free report >>
We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Delta Air Lines, Inc. (DAL) - free report >>
United Airlines Holdings Inc (UAL) - free report >>
Image: Bigstock
Delta Air Lines Down to Sell on Terror Attacks & Dull View
On Jun 20, Zacks Investment Research downgraded Delta Air Lines (DAL - Free Report) to a Zacks Rank #4 (Sell). Going by the Zacks model, companies holding a Zacks Rank #4 are likely to underperform the broader market.
Why the Downgrade?
Shares of Delta, like its peers including American Airlines Group (AAL - Free Report) and United Continental Holdings (UAL - Free Report) , have been suffering greatly due to the mass shooting at a nightclub in Orlando and the explosion at the Shanghai Pudong airport on Jun 12.
Such acts of terrorism impact airline stocks as there is a possibility of waning travel demand due to security fears. The timing of the attacks could not have been worse as the three-month period between June and August has been predicted to be the busiest one for U.S. carriers in terms of air travel.
Moreover, the explosion at Shanghai's Pudong International Airport highlights the necessity to tighten security at airports.
Outlook
Moreover, Delta issued a below-par guidance while reporting its May traffic figures. The carrier now expects passenger revenue per available seat mile (PRASM: a measure of unit revenue) to decline around 4.5% in the second quarter of 2016. The earlier projection had called for a decline in the band of 2.5% to 4.5%. Delta expects operating margin near the lower end (i.e. near 21%) of its previous view in the band of 21% to 23% for the second quarter.
Earnings Estimates
In view of this gloomy scenario, earnings per share estimates are moving south. Over the last 7 days, earnings estimates for the second quarter and full-year 2016 have been trimmed by 2 cents and 10 cents to $1.80 and $6.31, respectively. Moreover, the EPS estimate for 2017 has been reduced by 19 cents to $6.57 over the same time frame.
DELTA AIR LINES Price and Consensus
DELTA AIR LINES Price and Consensus | DELTA AIR LINES Quote
A Key Pick
Investors interested in the airline space may consider SkyWest, Inc. (SKYW - Free Report) , which sports a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>